0,1 New Jersey. ~ )(...-_..,XA".f--- ~4 Natural Gas. September 20, 2018 VIA FEDERAL EXPRESS

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1 0,1 New Jersey ~4 Natural Gas September 20, 2018 VIA FEDERAL EXPRESS Honorable Aida Camacho-Welch, Secretary New Jersey Board of Public Utilities 44 South Clinton A venue, 3rd Floor, Suite 314 P.O. Box 350 Trenton, NJ Re: IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ANNUAL REVIEW AND REVISION OF SOCIETAL BENEFITS CHARGE FACTORS FOR REMEDIATION YEAR 2018 BPU DOCKET NO. GR1809 Dear Secretary Camacho-Welch: Enclosed herewith for filing, please find an original and ten. (10) copies of the Petition of New Jersey Natural Gas Company ("NJNG") for the Annual Review and Revision of its Societal Benefits Charge ("SBC") Factors. A copy of the Petition is being served upon the New Jersey Division of Rate Counsel and the Division of Law. Kindly acknowledge receipt of this filing by date stamping the enclosed copy of this letter and returning same in the self-addressed, stamped envelope. AKD:fk Enclosures C: Service List Respectfully submitted, ~ )(...-_..,XA".f--- Andrew K. Dembia Regulatory Affairs Counsel 1415 Wyckoff Road P.O. Box 1464 Phone:

2 IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ANNUAL REVIEW AND REVISION OF SOCIETAL BENEFITS CHARGE (SBC) FACTORS FOR REMEDIATION YEARS 2018 DOCKET NO. GR1809 SERVICE LIST NJNG Mark G. Kahrer New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 James Corcoran New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Marianne Harrell New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Tina Trebino New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Andrew Dembia New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 NJ BOARD OF PUBLIC UTILITIES Stacy Peterson N.J. Board of Public Utilities 44 South Clinton Avenue, 3rd Floor Post Office Box 350 Trenton, New Jersey Megan Lupo N.J. Board of Public Utilities 44 South Clinton Avenue, 3 rd Floor Post Office Box 350 Trenton, New Jersey Oneil Hamilton N.J. Board of Public Utilities 44 South Clinton Avenue, 3 rd Floor Post Office Box 350 Trenton, New Jersey Bethany Rocque-Romaine N.J. Board of Public Utilities 44 South Clinton Avenue, 3 rd Floor Post Office Box 350 Trenton, New Jersey Judy DeSalvatore New Jersey Natural Gas Company 1415 Wyckoff Road P.O. Box 1464 Frederick W. Peters, Esq. Law Offices of Frederick W. Peters th Street, NW Suite 750 Washington, D.C

3 IN THE MATTER OF THE PETITION OF NEW JERSEY NATURAL GAS COMPANY FOR THE ANNUAL REVIEW AND REVISION OF SOCIETAL BENEFITS CHARGE (SBC) FACTORS FOR REMEDIATION YEARS 2018 DOCKET NO. GR1809 SERVICE LIST DIVISION OF RATE COUNSEL Stefanie A. Brand, Esq. Division of Rate Counsel 140 East Front Street, 4 th Floor P.O. Box 003 Trenton, NJ Felicia Thomas-Friel, Esq. Division of the Rate Counsel 140 East Front Street, 4 th Floor P.O. Box 003 Trenton, NJ Brian Lipman, Litigation Manager Division of the Rate Counsel 140 East Front Street, 4 th Floor P.O. Box 003 Trenton, NJ Henry Ogden Division of the Rate Counsel 140 East Front Street, 4 th Floor P.O. Box 003 Trenton, NJ DEPT. OF LAW & PUBLIC SAFETY DIVISON OF LAW Caroline Vachier, DAG Deputy Attorney General Dept. of Law & Public Safety - Division of Law 124 Halsey Street P.O. Box Newark, NJ Alex Moreau, DAG Deputy Attorney General Dept. of Law & Public Safety - Division of Law 124 Halsey Street P.O. Box Newark, NJ Renee Greenberg, DAG Deputy Attorney General Dept. of Law & Public Safety - Division of Law 124 Halsey Street P.O. Box Newark, NJ Geoffrey Gersten. DAG Deputy Attorney General Dept. of Law & Public Safety - Division of Law 124 Halsey Street P.O. Box Newark, NJ 07101

4 Exhibit P-1 Page 1 of 5 STATE OF NEW JERSEY BOARD OF PUBLIC UTILITIES IN THE MATTER OF THE PETITION ) OF NEW JERSEY NATURAL GAS ) PETITION COMPANY FOR THE ANNUAL REVIEW ) AND REVISION OF SOCIETAL BENEFITS ) BPU DOCKET NO. GR1809 CHARGE FACTORS FOR ) REMEDIATION YEAR 2018 ) TO: THE HONORABLE COMMISSIONERS OF THE NEW JERSEY BOARD OF PUBLIC UTILITIES New Jersey Natural Gas Company ( Petitioner, NJNG or the Company ) hereby requests that the New Jersey Board of Public Utilities (the Board or BPU ) approve, pursuant to N.J.S.A. 48:2-21, the Company s filing related to its Societal Benefits Charge ( SBC ) factors. The factors included in the SBC are the Remediation Adjustment ( RA ) rate, the statewide Universal Service Fund ( USF ) rate, 1 and the New Jersey Clean Energy Program ( NJCEP ) rate. The Company is requesting in this filing that the Board: (1) increase the Company s per therm after-tax RA rate; (2) increase the NJCEP per therm after-tax rate; and (3) approve the remediation expenditures incurred by the Company for the period July 1, 2017 through June 30, 2018 ( Remediation Year 2018 ), to be effective April 1, 2019, or as of the effective date of the Board Order in this proceeding. These rate changes result in an overall increase of approximately 0.50 percent to the average residential heating customers monthly bill. 1. Petitioner is a corporation duly organized under the laws of the State of New Jersey and is a public utility engaged in the sale, distribution and transportation of natural gas subject to the 1 USF is a fund established by the Board to support affordable electric and natural gas heating service for eligible residential customers in New Jersey. The statewide USF rates are addressed in annual filings submitted simultaneously by New Jersey s natural gas and electric utilities. The current after-tax natural gas USF factor of $ per therm was approved by the Board in its September 17, 2018 Order in Docket No. ER

5 Exhibit P-1 Page 2 of 5 jurisdiction of the Board. Petitioner's principal business office is located at 1415 Wyckoff Road, Wall, New Jersey Communications and correspondence relating to this Petition should be sent to: Mark G. Kahrer, Vice President - Regulatory Affairs Andrew K. Dembia, Esq., Regulatory Affairs Counsel New Jersey Natural Gas Company 1415 Wyckoff Road, P.O. Box 1464 Wall, New Jersey (732) (M. Kahrer) (732) (A. Dembia) MKahrer@njng.com ADembia@njng.com Frederick W. Peters, Esq. Law Offices of Frederick W. Peters th Street, NW Suite 750 Washington, D.C (202) fwpeters1@verizon.net 3. The SBC was established within the Electric Discount and Energy Competition Act ( EDECA ), N.J.S.A. 48:3-49 et seq., for the recovery by natural gas and electric utilities of costs associated with Manufactured Gas Plant ( MGP ) remediation, consumer education, assistance to low-income customers including the USF, and renewable and energy-efficiency programs now provided through the NJCEP. 4. Pursuant to a Board Order dated March 30, 2001, approving the Stipulation in Docket Nos. GX and GO (the Unbundling Order ), NJNG received approval to implement and assess an SBC as a non-by-passable charge applicable to the Company s customers. 2 2 Pursuant to legislation signed into law on January 28, 2011, N.J.S.A.48:3-60.1, natural gas commodity and delivery service charges for natural gas that is used to generate electricity for resale are not to include SBC charges. 2

6 Exhibit P-1 Page 3 of 5 5. This Petition (Exh. P-1) is accompanied and supported by the following Pre-filed Direct Testimonies and Exhibits that are attached hereto and made part of this Petition: Exh. P-2 Direct Testimony of John Raspa Director Environmental Services Remediation Activities Exh. P-3 Direct Testimony of James M. Corcoran, NJNG Director-Revenue Requirements Proposed Revenue Increase for the RA and NJCEP factors Exh. P-4 Red-lined NJNG Gas Service Tariff sheets Exh. P-5 SBC rate impacts on NJNG's customers Exh. P-6 Proposed form of Public Notice Additional information responsive to the fifteen (15) minimum filing requirements ( MFRs ) for RA filings, approved by the BPU in Docket No. GR , will be provided at a later date under separate cover. 6. As part of the settlement of the Company s base rate case in BPU Docket No. GR J, and subsequently approved in the Unbundling Order noted above, the Board approved and established the RA clause as the cost recovery method by which the Company is permitted to recover its actual Remediation Costs, on a deferred basis, over a rolling-seven year period. Remediation Costs include all investigation, testing, land acquisition if appropriate, remediation and/or litigation costs and expenses, and other liabilities specifically relating to MGP facility sites, disposal sites, or sites to which material may have migrated, as a result of the earlier operation or decommissioning of MGP sites. 7. On June 22, 2018, in BPU Docket No. QO , the Board established each utility s level of expenditures for the statewide NJCEP for July 2017 through June NJNG s annual funding obligation is $15.1 million. 3

7 Exhibit P-1 Page 4 of 5 8. On July 25, 2018, in BPU Docket No. GR , the Board issued an Order which authorized the Company to increase its per-therm after-tax RA rate from $ to $ and to increase its NJCEP per-therm after-tax rate of $ to $ These rates, along with the USF rate of $ per therm, will comprise NJNG s SBC after-tax rate of $ per therm. 9. The Company also requests the approval of the remediation expenditures incurred by the Company for Remediation Year The Company requests these rates and expenditures be approved effective April 1, 2019, or as of the effective date of the Board Order in this proceeding. 10. NJNG has served notice and a copy of this filing, together with a copy of the annexed exhibits, schedules and NJNG s supporting testimonies being filed herewith, upon the New Jersey Division of Rate Counsel, 140 East Front Street, 4th Floor, P.O. Box 003, Trenton, New Jersey, and the Department of Law and Public Safety, 124 Halsey Street, P.O. Box 45029, Newark, New Jersey, Copies of this Petition and supporting testimony will also be sent to the persons identified on the service list provided with this filing. Moreover, copies of the Company s filing will be available at NJNG s Customer Service Centers and on the Company s website at: The Company respectfully requests that this matter be retained by the Board and that a Commissioner be designated as Presiding Officer to set a procedural schedule, rule on Motions, and conduct any evidentiary hearings, if necessary, as expeditiously as possible. 4

8 Exhibit P-1 Page 5 of 5 WHEREFORE, NJNG respectfully requests that the Board: 1. Approve as of April 1, 2019, or as of the effective date of the Board Order in this proceeding, NJNG s request to increase its RA Factor; 2. Approve as of April 1, 2019, or as of the effective date of the Board Order in this proceeding, NJNG s request to increase its NJCEP Factor; 3. Approve Remediation Year 2018 costs for the period July 1, 2017 through June 30, 2018; 4. Grant final approval of the Company s proposals included in this Petition; 5. Retain this matter and designate a Commissioner as Presiding Officer to set a procedural schedule, rule on Motions, and conduct any evidentiary hearings, if necessary, as expeditiously as possible; and 6. Grant such other relief, as the Board deems just, reasonable and necessary. Respectfully submitted, NEW JERSEY NATURAL GAS COMPANY By: Andrew K. Dembia, Esq. Date: September 20,

9 STATE OF NEW JERSEY ) COUNTY OF MONMOUTH ) VERIFICATION MARK G. KARRER of full age, being duly sworn according to law, on his oath deposes and says: 1. I am Vice President, Regulatory Affairs for New Jersey Natural Gas Company, the Petitioner in the foregoing Petition. 2. I have read the annexed Petition, along with the Schedules and Exhibits attached thereto, and the matters and things contained therein are true to the best of my knowledge and belief. Urod2 Mark G. Kahrer Sworn and subscribed to before me this~ th day of September 2018 SEP KATHLEEN KLEINERTZ NOTARY PUBLIC, STATE OF NEW MY COMMISSION EXPIRES

10 Exhibit P-2 Page 1 of 11 NEW JERSEY NATURAL GAS COMPANY DIRECT TESTIMONY OF JOHN RASPA DIRECTOR OF ENVIRONMENTAL SERVICES Q. PLEASE STATE YOUR NAME, CURRENT POSITION AND BUSINESS ADDRESS. A. My name is John Raspa. I am the Director - Environmental Services ( ES ) for New Jersey Natural Gas Company ( NJNG or the Company ). My business address is 1415 Wyckoff Road, Wall, New Jersey Q. PLEASE DESCRIBE YOUR EDUCATION AND BUSINESS EXPERIENCE. A. I earned a bachelor s degree in Chemical and Biological sciences from Rutgers University in 1976 and completed advanced postgraduate education in Environmental and Sanitary Engineering from Rutgers University, Cook College of Sciences. I maintain a professional certification in the field of Hazardous Materials Management. I am also skilled in Risk Management and Environmental Management Systems through formal training and practical applications in my professional career and have more than 30 years of experience in the environmental field. I have held numerous positions and responsibilities in the area of environmental management that have included strategy, compliance, risk management and business acquisition. From 1976 to 1988, I worked in the public sector for various health and environmental agencies. Between 1989 and 2000, I was employed by a Fortune 500 specialty chemical manufacturer, during which period my responsibilities progressively included regional management (New Jersey), divisional management (national) and eventually global leadership for approximately 30 manufacturing locations. My duties during that time also included direct responsibility for the clean-up of major properties under various federal and state regulatory programs, including some located in New Jersey. In 2001, I joined NJNG as the Director Environmental, Health & Safety Services.

11 Exhibit P-2 Page 2 of 11 Direct Testimony John Raspa Q. WHAT ARE YOUR PRIMARY DUTIES AND RESPONSIBILITIES AS NJNG S DIRECTOR OF ENVIRONMENTAL SERVICES? A. As the Director Environmental Services for NJNG, I have overall responsibility for developing and managing the department s operating budget in connection with ongoing activities at each of the Company s former manufactured gas plant ( MGP ) sites which NJNG is responsible for remediating under the direction of the New Jersey Department of Environmental Protection ( NJDEP ). In addition, I maintain the oversight of various day-to-day activities involving decision making on key departmental matters, including the MGP program. My duties and responsibilities also include the following: ensuring that crucial environmental liabilities and human health exposure risks are identified and addressed on a timely and effective basis through internal processes and procedures; developing and monitoring the MGP program s effectiveness; reporting key performance indicators to management; and developing and maintaining effective working relationships with federal, state and local stakeholders, public agencies and organizations whose collective responsibilities encompass environmental, and human health issues. Those entities include, but are not limited to, municipal governments, community groups, the U.S. Environmental Protection Agency, the NJDEP, and the U.S. Occupational Safety and Health Administration. Q. HAVE YOU TESTIFIED PREVIOUSLY IN REGULATORY PROCEEDINGS? A. Yes. I have submitted testimony on behalf of the Company in its last 11 Societal Benefits Charge ( SBC ) proceedings on the Remediation Adjustment ( RA ) Factor, Docket Nos. GR , GR , GR , GR , GR , GR , GR , GR , GR , GR and GR Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING? A. The purpose of my testimony is to: (1) provide a general overview of the Company s on-going MGP remediation program; (2) identify and describe the general nature and categories of expenses incurred by the Company during the period of July 1, 2017 through June 30, 2018 ( Remediation Year 2018 ); and (3)

12 Exhibit P-2 Page 3 of 11 Direct Testimony John Raspa 1 2 provide a brief history of the Company s former MGP sites and report on key developments relating to ongoing remediation activities at those sites THE COMPANY S MGP REMEDIATION PROGRAM Q. PLEASE EXPLAIN THE NJDEP S ROLE IN MGP SITE REMEDIATION. A. The remediation of the Company's MGP sites is subject to strict oversight by the NJDEP. NJNG must comply with relevant rules and regulations issued by that agency, including specific procedures and timetables within Administrative Consent Orders ( ACOs ) issued for each of the Company's three MGP sites that include Atlantic Highlands, Long Branch and Toms River. The ACOs also delineate the responsibilities of all parties regarding site remediation. As a result of the ACOs, all remedial action work plans for the Company's MGP sites must be submitted to and approved by the NJDEP. As of May 2012, changes became effective for the process in which the NJDEP will address future remediation oversight responsibilities. The Site Remediation Reform Act ( SRRA ), N.J.S.A. 58:10C-1 et seq. establishes a licensing program for environmental consultants and contractors to be certified by the NJDEP as Licensed Site Remediation Professionals ( LSRPs ) overseen by a State licensing board. The LSRPs essentially replace some of the basic functions of the NJDEP. For example, in a wide variety of environmental settings and situations, LSRPs are authorized to sign and certify reports through the site investigation and cleanup process. The NJDEP is no longer required to review and approve investigation and cleanup plans in advance, or to issue No Further Action letters and Covenants Not to Sue at the conclusion of cleanups. LSRPs determine the correctness and conclusion of investigations and cleanups, and issue the final sign-off document known as a "Response Action Outcome" ("RAO"). LSRPs have wide-ranging responsibilities, including permit revocation and other penalties and enforcement actions. Following an LSRP s issuance of a RAO, the NJDEP has three years to audit the LSRP s work, though the facts and circumstances for the NJDEP to invalidate an RAO are relatively narrow.

13 Exhibit P-2 Page 4 of 11 Direct Testimony John Raspa Q. PLEASE DESCRIBE THE COMPANY S MGP REMEDIATION STRATEGY AND YOUR SPECIFIC ROLE IN EFFECTIVELY IMPLEMENTING THAT STRATEGY. A. As a general matter, the Company s remediation strategy continues to include the identification, development and implementation of both conventional and innovative engineering and business solutions that enable NJNG to cost-effectively investigate, remediate and manage the risk of the long-term environmental liabilities associated with the Company s former MGP properties. NJNG s focus is to ensure the protection of human health and the environment. I am directly responsible for all aspects of the Company s MGP remediation program, including the responsibility to identify and obtain the necessary resources to carry out the program. I am also responsible for ensuring adherence to NJDEP requirements. Additionally, I am charged with direct oversight and responsibility for monitoring all costs the Company incurs in connection with implementing the MGP program, including, but not limited to, those costs associated with investigations, testing, land acquisition, remediation and/or other liabilities specifically relating to the Company s former MGP sites, disposal sites, or sites to which MGP material may have migrated as a result of the operation or decommissioning of the Company s former MGP facilities ( Remediation Costs ). More detail on Remediation Costs is provided later in my testimony. As part of its MGP program, the Company is committed to ensuring that its MGP-related expenditures are limited to those that the Company believes are reasonable and necessary to implement the MGP program for the work plans authorized or mandated by the NJDEP. As a result, the Company consistently seeks to identify and separate MGP related soil/sediment impacts from non-site related contamination, such as vehicle exhaust, industrial air emissions and storm water runoff, thereby avoiding costs for the extensive remediation of non-mgp impacts. 28

14 Exhibit P-2 Page 5 of 11 Direct Testimony John Raspa THE GENERAL NATURE AND CATEGORIES OF REMEDIATION COSTS Q. PLEASE DESCRIBE THE NATURE AND CATEGORIES OF THE REMEDIATION COSTS THE COMPANY INCURRED DURING REMEDIATION YEAR 2018 IN CONNECTION WITH IMPLEMENTING AND MANAGING ITS MGP PROGRAM. A. The costs the Company incurred during Remediation Year 2018 to implement and manage its MGP program include costs for the following: outside consulting and engineering services; outside legal services; community outreach; analytical laboratory work; construction services (including construction management); health and safety activities; air monitoring and soil sampling; a variety of ancillary support services and incremental internal labor directly associated with MGP activities. Third-party services provided to the Company in connection with MGPrelated activities (such as project management and engineering support services, and contractors who provide physical remediation services) are competitively bid through NJNG s contractor procurement procedures BACKGROUND AND CURRENT STATUS OF REMEDIATION EFFORTS AT NJNG s MGP SITES Q. PLEASE PROVIDE A BRIEF BACKGROUND OF THE ATLANTIC HIGHLANDS SITE. A. The Atlantic Highlands site was first occupied by the Atlantic Highlands Gas Company ( AHGC ) in In 1913, AHGC was merged with and consolidated into Standard Gas Company ( SGC ), which subsequently acquired the assets of Freehold Gas Light Company in In the early 1920s, SGC was purchased and reorganized into a new entity known as County Gas Company ( CGC ). In 1952, CGC became New Jersey Natural Gas Company. The Atlantic Highlands site operated as a carbureted water gas manufacturing facility from 1910 until 1949, when manufacturing operations were discontinued. Coal and coke were used as feedstock to produce the carbureted water gas. Demolition activities at this site were completed around NJNG currently uses the Atlantic Highlands site as a Division Service Center.

15 Exhibit P-2 Page 6 of 11 Direct Testimony John Raspa Q. PLEASE SUMMARIZE THE KEY EVENTS THAT OCCURRED DURING REMEDIATION YEAR 2018 IN CONNECTION WITH MGP REMEDIATION ACTIVITIES AT THE ATLANTIC HIGHLANDS SITE. A. The key 2018 events for the Atlantic Highlands site include: The LSRP issued the RAO document (a/k/a No Further Action letter) for the completed soil remediation work at the Area of Concern-4 (AOC-4) property. The Company completed and submitted to the NJDEP the required biennial inspection reports for the six properties (AOC-1A, AOC-1B, AOC-1C, AOC-1D, AOC-6A, AOC-6G) where an engineering control (cap) was installed as part of the completed restricted-use soil remedy. The Company prepared and submitted to the NJDEP the necessary paperwork to renew the discharge to surface water permit (NJDPES-DSW) for the ground water treatment plant (GWTP). The Company collected additional soil data in connection with efforts to complete the Remedial Action Work Plan (RAWP) and bid documents (plans and specifications) for properties located between West Highland and Center Avenues. The Company continued to collect rental income from the three commercial parcels it purchased for the purpose of performing a restricted-use soil remedy on the properties. Q. WHAT IS THE STATUS OF THE REMEDIATION WORK UNDERWAY AT THE ATLANTIC HIGHLANDS SITE? A. Remediation work currently underway includes: The Company continues to operate and maintain the long-term GWTP to ensure the required control/containment of the groundwater impact area. The Company continues efforts to complete the RAWP, permitting, and design activities to begin the West Highland and Center Avenues soil remediation work. The Company continues efforts to complete the RAWP for property AOC-1E. Q. WHAT ARE THE NEXT STEPS REGARDING FUTURE REMEDIATION AT THE ATLANTIC HIGHLANDS SITE?

16 Exhibit P-2 Page 7 of 11 Direct Testimony John Raspa A. The Company will obtain the required wetlands/creek disturbance permits, hire a contractor and begin the West Highland and Center Avenues soil remediation work. The Company will continue efforts to obtain property owner consent to begin the desired restricted-use soil remediation work at the Julian Ice (AOC-3) property. Q. PLEASE PROVIDE A BRIEF BACKGROUND OF THE LONG BRANCH SITE. A. The Long Branch site first operated as a gas manufacturing facility for the Long Branch Gas and Light Company ( LBGLC ) from approximately In 1895, LBGLC merged into Consolidated Gas Companies. The site was purchased and operated by Jersey Central Power & Light Company ( JCP&L ) from 1925 until 1952 and was included in the sale of all JCP&L gas operations to NJNG in Although exact information is not available, it is likely that either carbureted water or oil gas was manufactured at this site. All manufacturing operations ceased in A portion of the former site was leased to the City of Long Branch from 1966 until 1976 for use as a park and, in 1976, NJNG donated the property to the City of Long Branch. Demolition of plant-related structures was completed around At that time, another portion of the site was sold to private parties. The demolition of several plant structures on that portion of the site was completed in Numerous investigation activities, multiple phases of on- and offsite-soil remedial excavation, creek cleanup and restoration activities were completed through Q. PLEASE SUMMARIZE THE KEY EVENTS THAT OCCURRED DURING REMEDIATION YEAR 2018 IN CONNECTION WITH MGP REMEDIATION ACTIVITIES AT THE LONG BRANCH SITE. A. Key activities undertaken during this time period include: The Company submitted to the NJDEP the LSRP-approved Seaview Avenue Bridge RAR notice in lieu of deed notice and soil Remedial Action Permit application for a portion of Seaview Avenue. The Company also submitted the LSRP-approved No Further Investigation and Remediation Long Branch Joline Avenue RAR to the NJDEP.

17 Exhibit P-2 Page 8 of 11 Direct Testimony John Raspa The LSRP prepared a total of 21 Response Action Outcomes (RAOs) for both onand offsite parcels that were investigated, remediated or capped, which were provided to the NJDEP. NJNG s consultant, after further investigative studies, recommended a ground water remedy alternative for which a peer review was performed to determine the feasibility of constructing a containment wall. NJNG presented the proposal to the NJDEP and received a favorable opinion. The recommended remedy is expected to cost about 60 to 70 percent less than other practical alternatives and would be executed in a relatively shorter period of time. Q. WHAT IS THE STATUS OF THE REMEDIATION WORK UNDERWAY AT THE LONG BRANCH SITE? A. Modeling and design of the containment wall has started. NJNG continues semiannual soil cap inspections and semi-annual groundwater monitoring in accordance with the NJDEP groundwater monitoring requirements. Q. PLEASE PROVIDE A BRIEF BACKGROUND OF THE MANCHESTER SITE. A. As a result of the dismantling of the Company s Long Branch and Atlantic Highlands plants in the mid-1970s, materials were delivered to an asphalt recycling facility identified as South Brunswick Asphalt ( SBA ). SBA operated in three locations, including Berkeley Township and Manchester Township. Q. SUMMARIZE THE KEY EVENTS THAT OCCURRED DURING REMEDIATION YEAR 2018 IN CONNECTION WITH MGP REMEDIATION ACTIVITIES AT THE MANCHESTER SITE. A. A Remedial Investigation Report (RIR) and Classification Exception Area (CEA) were submitted to the NJDEP in September NJNG continued to conduct shallow, intermediate, and deep groundwater monitoring in accordance with the semi-annual groundwater schedule approved by the NJDEP and LSRP. Q. WHAT ARE THE NEXT STEPS REGARDING FUTURE REMEDIATION AT THE MANCHESTER SITE? A. The remaining efforts include continued groundwater monitoring. A RAWP and groundwater Remedial Action permit will be prepared if groundwater impacts continue to exceed the NJDEP Groundwater Quality Standards.

18 Exhibit P-2 Page 9 of 11 Direct Testimony John Raspa Q. PLEASE PROVIDE A BRIEF BACKGROUND OF THE TOMS RIVER SITE. A. The Toms River site was operated as a coal gas plant from approximately 1900 to 1911 by the Toms River and Island Heights Electric and Power Company. The site was sold to the Ocean County Gas Company in 1911 and operated by them until 1928 when the site was purchased by JCP&L. Gas manufacturing operations ceased in Although exact information is not available, it is likely that either carbureted water or oil gas was manufactured at the Toms River site. This site was included in the sale of all JCP&L gas operations to NJNG in Demolition activities at this site were completed around From 1952 until 1989, NJNG used this site as a Division Service Center but ceased operations at the site in 1989 when the Company relocated the Division Offices. This cessation of operations triggered the Environmental Cleanup Responsibility Act ( ECRA ), requiring the submittal of an Initial Notice to the NJDEP. Q. PLEASE SUMMARIZE THE KEY EVENTS THAT OCCURRED DURING REMEDIATION YEAR 2018 IN CONNECTION WITH MGP REMEDIATION ACTIVITIES AT THE TOMS RIVER SITE. A. The key 2018 events for the Toms River Site include: The Company completed the Stage 2 and Stage 3 in-situ stabilization (ISS) soil remediation work at the AOC-1 properties, including building demolition and pipeline excavation activities, and the relocation of the Toms River Regulator Station (TR Station). Q. WHAT IS THE STATUS OF THE REMEDIATION WORK UNDERWAY AT THE TOMS RIVER SITE? The Company continues to prepare the plans and specifications for the final (Stage 4) soil remediation work at the AOC-1 properties, including the excavation and ISS beneath the former TR Station location.

19 Exhibit P-2 Page 10 of 11 Direct Testimony John Raspa Q. WHAT ARE THE NEXT STEPS REGARDING FUTURE REMEDIATION AT THE TOMS RIVER SITE? A. The Company will hire a contractor and begin the final (Stage 4) soil remediation work at the AOC-1 properties, including the dismantling of the former TR Station and the ISS and excavation work beneath it. The Company will continue efforts (e.g., discussions and negotiations) to obtain the required consent from off-site property owners to perform a restricted-use remedy on their properties. The Company will perform a Phase I Environmental Site Assessment (ESA) for the AOC-2 (Conrail) property, to evaluate the property owner s offer and preference to sell the property to NJNG, instead of providing consent for a restricted-use soil remedy. Q. PLEASE PROVIDE A BRIEF BACKGROUND OF THE BERKELEY SITE. A. The Berkeley MGP site has been identified as an additional MGP location as a result of coal tar material disposal from the Long Branch and Atlantic Highlands MGP facilities in the late 1970 s and 1980 s, after the site was sold to South Brunswick Asphalt. Q. WHAT IS THE STATUS OF THE REMEDIATION WORK UNDERWAY AT THE BERKELEY MGP SITE? A. There is no activity underway at the Berkeley property since NJNG is not considered the Person Responsible for conducting the Remediation (PRCR), and the Company has not had any recent communication with the property owner. Pursuant to NJDEP regulations, any person who executes or is otherwise subject to a memorandum of agreement, memorandum of understanding, administrative consent order, remediation agreement, or administrative order to remediate a contaminated site is considered the PRCR. Thus, without the property owner s consent, which has not been forthcoming, the Company is unable to initiate or conduct remediation activities at this time. However, the Company will continue efforts to obtain the property owner s consent.

20 Exhibit P-2 Page 11 of 11 Direct Testimony John Raspa Q. WHAT ARE NATURAL RESOURCE DAMAGES? A. The term Natural Resource Damages ( NRD ) refers to claims that arise from alleged releases of hazardous substances that have resulted in injuries to natural resources (such as loss or impairment of ecological function) or the deprivation of natural resource services (such as water supply, recreation or ecological services) with respect to resources owned by, managed by, or otherwise within the trusteeship or co-trusteeship of the State of New Jersey. Q. HAVE ANY FORMAL NRD CLAIMS BEEN MADE OR FILED AGAINST THE COMPANY? A. No. NJDEP has not filed any formal NRD claims against the Company to date. Separately, an Environmental Justice ( EJ ) petition filed on behalf of the Concerned Citizens Coalition in Long Branch has included NRD claims. The EJ petition is still active and being enforced by the NJDEP. The NJDEP has stated that they will explore Long Branch-related NRD claims upon the completion of remediation activities in Long Branch. NJNG anticipates that NRD claims may also be filed for each of its MGP sites since there are potential groundwater impacts at each location. NJNG cannot predict whether the NJDEP will impose additional or modified remediation-related requirements in the future. Subject to that caveat, NJNG is not currently aware of any material events relating to NJDEP directives, or otherwise, which could have an impact on the Company s NRD liability. As a result of prior settlement discussions with BPU Staff and Rate Counsel, no NRD expenses have been included for recovery in this filing. Q. DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes.

21 Exhibit P-3 Page 1 of 7 NEW JERSEY NATURAL GAS COMPANY DIRECT TESTIMONY OF JAMES M. CORCORAN DIRECTOR - REVENUE REQUIREMENTS Q. PLEASE STATE YOUR NAME, CURRENT POSITION AND BUSINESS ADDRESS? A. My name is James M. Corcoran and I am the Director Revenue Requirements for New Jersey Natural Gas Company ( NJNG or the Company ). My business address is 1415 Wyckoff Road, Wall, New Jersey Q. PLEASE DESCRIBE YOUR EDUCATION AND BUSINESS EXPERIENCE. A. As Director - Revenue Requirements, I perform the calculation of revenue requirements for NJNG s base rates as well as cost recovery riders. I received a Bachelor of Science degree in Accounting from Seton Hall University. In May 2010, I received a Master s of Business Administration - Finance from Seton Hall University. I was employed by the State of New Jersey Board of Public Utilities ( BPU or Board ) beginning in July 1986 as an Accountant- Trainee and over a twenty-year career moved into various Analyst positions of increased responsibility. In March 2007, I accepted a Senior Regulatory Analyst position at Public Service Electric and Gas Company with responsibilities that included preparing the requisite testimony and financial schedules for various rate recovery mechanisms. In August 2007, I was promoted to the position of Principal Staff Regulatory Analyst and, in August 2011, I was promoted to the position of Revenue Requirements Manager. I joined NJNG in July 2014 as the Manager Revenue Requirements. In January 2018, I was promoted to Director Revenue Requirements. My responsibilities include supporting the Regulatory Affairs department with the preparation of testimony regarding all rate recovery matters. I also participate on behalf of NJNG in the New Jersey Resources financial reporting committee. Q. HAVE YOU PREVIOUSLY TESTIFIED IN STATE REGULATORY PROCEEDINGS? A. Yes. I have submitted Direct and Supplemental Testimony before the Board in NJNG s most recent base rate case (BPU Docket No. GR ). I have also

22 Direct Testimony James M. Corcoran Exhibit P-3 Page 2 of submitted Direct Testimony before the Board in NJNG s NJ Reinvestment in System Enhancement ( NJ RISE ) cost recovery petition (BPU Docket No. GR ) and the Annual Review and Revision of Societal Benefits Charge ( SBC ) (BPU Docket No. GR ). In addition, I have provided testimony on behalf of PSEG Power, LLC in a rate matter proceeding before the Connecticut Public Utilities Regulatory Authority in PURA Docket No Q. WHAT ARE YOUR RESPONSIBILITIES WITH RESPECT TO THIS PROCEEDING? A. I am responsible for: 1) supporting the schedules contained in the Company s SBC filing, including the Remediation Adjustment ( RA ) component of the SBC, which sets forth and summarizes actual remediation expenditures incurred by the Company during the period July 2017 June 2018 ( Remediation Year 2018 ) for the remediation at former NJNG manufactured gas plant ( MGP ) sites; 2) supporting the interest calculation on unrecovered deferred MGP expenditure balances; 3) calculating the proposed RA factor necessary to recover the MGP expenditure balance, including interest; and 4) addressing the rates for the other clauses within the SBC, including the New Jersey Clean Energy Program ( NJCEP ) and the Universal Service Fund ( USF ). In this SBC filing, NJNG is petitioning the Board: (1) for approval of the RA expenditures for the period July 2017 to June 2018 as prudent and reasonable; (2) to increase the after-tax RA rate of $ per therm to $ per therm; and (3) to increase the after-tax NJCEP rate from $ per therm to $ per therm, effective April 1, 2019, or as of the date of a Board order in this proceeding approving these proposed rates. 1 1 Pursuant to P.L. 2016, c. 57, these rates include New Jersey Sales and Use Tax rate of percent effective January 1, 2018.

23 Direct Testimony James M. Corcoran Exhibit P-3 Page 3 of I. HISTORY OF NJNG S REMEDIATION ADJUSTMENT CLAUSE Q. PLEASE DESCRIBE THE HISTORY OF NJNG S REMEDIATION ADJUSTMENT CLAUSE. A. As part of the settlement of the Company s base rate case filing in Docket No. GR J, NJNG was authorized in June 1992 to recover Remediation Costs on a deferred basis, over a rolling seven-year period and subject to BPU approval. As defined in the Company s BPU-approved tariff, Remediation Costs include costs associated with all investigation, testing, land acquisition if appropriate, remediation and/or litigation costs and expenses, or other liabilities, excluding personal injury claims, specifically relating to former MGP facility sites, disposal sites, or sites to which material may have migrated, as a result of the earlier operation or decommissioning of MGP sites. Examples of Remediation Costs the Company has previously included for recovery in SBC filings include: soil disposal and replacement, installation and maintenance of long-term groundwater treatment facilities, estuary development, site engineering and construction, consulting, community outreach, legal expenses and certain incremental payroll costs directly relating to the remediation of former MGP sites, disposal sites, or sites to which material may have migrated since operation of these MGP sites. Based on the above settlement, the total annual charge for such Remediation Costs during any Recovery Year is not permitted to exceed five percent of the Company s total revenues from natural gas sales during the preceding Remediation Year (July through the following June). Q. HOW IS THE NJNG RA FACTOR CURRENTLY DERIVED AND CALCULATED? A. The Company is currently authorized by the BPU to calculate its RA factor using a methodology that permits the Company to recover one-seventh of the actual Remediation Costs the Company incurs each Remediation Year, until fully amortized, plus any prior year Remediation Cost under- or over-recoveries net of any accumulated deferred third-party recoverable costs. In addition, pursuant to the BPU s Order Adopting Initial Decision and Stipulation dated October 5, 2004 in Docket No. GR , the Company is required to calculate and is permitted

24 Direct Testimony James M. Corcoran Exhibit P-3 Page 4 of to recover monthly carrying costs on its unamortized MGP expenditure balances using the methodology set forth on Original Sheet No. 16dated October 1, 2016 of the Company s Tariff. The referenced methodology provides, in pertinent part, that the Company shall calculate carrying costs on any under- or over-recovered RA cost balances, net of the deferred income taxes associated with those balances, using the same interest rate, which rate will be adjusted each August 31 based upon the seven-year constant maturity Treasury rate, shown in the Federal Reserve Statistical Release, plus 60 basis points. Interest applicable to the Company s unamortized RA balance shall be calculated and will accrue on a monthly basis and shall be rolled into the RA balance commencing each October 1. The impact and effect of this carrying cost methodology is set forth in Attachment A, Schedule 5, addressed in further detail below II. DESCRIPTION OF SUPPORTING RA SCHEDULES Q. PLEASE PROVIDE A BRIEF EXPLANATION OF ATTACHMENT A, SCHEDULES 1 THROUGH 5, WHICH SUPPORT THE COMPANY S PROPOSED REMEDIATION ADJUSTMENT IN THIS FILING. Schedule 1 Summary of Site Expenses for the period July 2017 through June Schedule 1 provides a summary of actual RA expenditures, by MGP site and cost category, of approximately $17.68 million for the period July 2017 June A summary of actual MGP expenses by vendor for the period July 2017 June 2018 will be provided subsequently in the Minimum Filing Requirements ( MFRs ). Schedule 2 Amortization of Recoverable Costs Schedule 2 provides the amortization calculation for Remediation Year 2017/2018 and recognizes the applicable seven-year recovery period for the year end periods June 2012 June The actual expenditures to be recovered for Remediation Years ended June 30, 2012 through June 30, 2018 is approximately $61.50 million in total and approximately $8.79 million annually.

25 Direct Testimony James M. Corcoran Exhibit P-3 Page 5 of Schedule 3 - Remediation Adjustment Factor Schedule 3 provides the calculation of the pre-tax and after-tax RA Factor for the 2017/2018 Recovery Year. The amount to be recovered is the sum of the following: (1) The Remediation Year amortizations from year end periods June June 2018 of approximately $8.79 million, per Schedule 2; plus (2) A reconciliation amount that is comprised of the total over-recovery through March 31, 2019 of approximately $0.793 million; plus (3) Interest of approximately $0.528 million. (4) The resulting net total amount of $8.52 million to be recovered is then divided by the projected therm sales of natural gas for the year ending March 31, 2020 which yields a pre-tax RA factor of $ per therm ($ per therm after-tax). As a result of the above calculations shown on Attachment A, Schedule 3, NJNG is proposing to increase the current after-tax RA Factor of $ per therm to $.0127 per therm. Schedule 4 - Annual Cap Calculation Schedule 4 calculates the limitation on the annual recovery of NJNG s remediation costs. The Company's total annual amortization to be collected from customers during a prospective Recovery Year may not exceed 5 percent of the Company s total gas revenues collected from customers during the preceding Remediation Year. Schedule 4 shows that the total amount of approximately $8.52 million projected to be recovered in 2019 is less than the five percent revenue cap of approximately $30.22 million based on the $ million in gas revenues for Remediation Year Schedule 5 Remediation Interest Calculation Schedule 5 calculates interest for the period beginning October 2017 and ending September 2018 on the Company s monthly average balance of deferred remediation costs using the methodology approved by the Board in Docket No. GR , dated April 28, The October 31, 2017 deferred balance includes interest that has been rolled-in from Remediation Year The column

26 Direct Testimony James M. Corcoran Exhibit P-3 Page 6 of on Schedule 5 labeled Net of Tax reflects the offset of deferred taxes based on the above-mentioned Board approved methodology. Effective September 1, 2018, the SBC annual interest rate for NJNG is 2.81 percent plus 60 basis points or 3.41 percent. Q. WHAT IS THE PROPOSED AFTER-TAX RA FACTOR FOR THIS FILING? A. As shown on Attachment A, Schedule 3, the Company is proposing to increase the current after-tax RA Factor from $ per therm to $ per therm, effective April 1, 2019 or as of the date of a Board Order in this proceeding III. OTHER SBC COMPONENTS Q. PLEASE EXPLAIN NJNG S NEW JERSEY CLEAN ENERGY PROGRAM FUNDING OBLIGATION. A. Annually, the BPU issues an order to update NJNG s NJCEP funding obligations, and the Company must provide the approved level of NJCEP funding to the State Treasurer regardless of actual customer usage. Any shortfall or excess in recovery is carried in the Company s NJCEP deferred account balance to be included in the future year s rate calculations. Attachment B includes the monthly NJCEP funding obligation for September 2018 through March 2020 based on the approved funding obligation in the BPU Order, dated June 22, 2018 in Docket No. QO NJNG s annual funding obligation is $15.1 million. Attachment B also includes estimated NJCEP recovery through March 2019 in order to determine the amount to be recovered from April 2019 through March Q. WHAT IS THE PROPOSED AFTER-TAX NJCEP FACTOR FOR THIS FILING? A. The Company proposes to increase its after-tax NJCEP Factor of $ per therm to $ per therm effective April 1, 2019 or as the date of a Board Order in this proceeding. The proposed rate recovers estimated NJCEP funding levels through March Supporting documentation for this factor is presented in Attachment B.

27 Direct Testimony James M. Corcoran Exhibit P-3 Page 7 of Q. WHAT IS THE AFTER-TAX USF FACTOR THAT IS INCLUDED IN THIS SBC FILING? A. The after-tax USF factor included in this SBC filing is $ per therm. This statewide USF factor was approved to be effective October 1, 2018 in the Board s September 17, 2018 Order in Docket No. ER IV. OVERALL PROPOSED PRICE CHANGES Q. WHAT IS THE PROPOSED AFTER-TAX SBC BILLING FACTOR FOR THIS SBC FILING AND THE IMPACT ON CUSTOMERS? A. The Company is proposing to: increase its after-tax RA rate from $ to $ per therm and after-tax NJCEP rate from $ to $ per therm effective Aril 1, 2019 or as of the date of a Board Order in this proceeding. This results in a proposed overall SBC after-tax rate of $ per therm. The proposed RA and NJCEP rates will result in an overall increase of approximately 0.50 percent to the average residential heating customer s monthly bill. Q. DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes.

28 Attachment A Schedule 1 Attachment A Schedule 1 NEW JERSEY NATURAL GAS COMPANY SOCIETAL BENEFITS CHARGE (SBC) REMEDIATION ADJUSTMENT RIDER REMEDIATION YEAR 2018 BPU DOCKET GR1809XXXX SUMMARY OF SITE EXPENSES July June 2018 TOTAL THIRD LINE REMEDIATION PARTY RECOVERY NO. SITE CONSULTING REMEDIATION LEGAL OTHER EXPENSES EXPENSES COST 1 Atlantic Highlands $460, $388, $231, ($126,632.54) $953, $0.00 $953, Berkeley $2, $13, $2, $0.00 $18, $0.00 $18, Long Branch $331, $203, $2, $64, $601, $ , Manchester $42, $25, $2, $0.00 $69, $0.00 $69, Toms River 1,406, $14,250, $133, $242, $16,032, $0.00 $16,032, TOTALS $2,244, $14,880, $371, $179, $17,676, $0.00 $17,676,762.75

29 Attachment A Schedule 2 NEW JERSEY NATURAL GAS COMPANY SOCIETAL BENEFITS CHARGE (SBC) REMEDIATION ADJUSTMENT RIDER REMEDIATION YEAR 2018 BPU DOCKET GR1809XXXX TOTAL YE 6/30/2018 YE 6/30/2017 YE 6/30/2016 YE 6/30/2015 YE 6/30/2014 YE 6/30/2013 YE 6/30/2012 COSTS ELIGIBLE FOR AMORTIZATION & RECOVERY OVER 7 YEARS: Actual Expenditures $61,506,862 $17,676,763 $10,088,817 $7,197,989 $5,750,297 $4,205,009 $6,182,933 $10,405,054 ANNUAL RECOVERY SUMMARY: Annual Amortization of Period Costs (seven years) $8,786,695 $2,525,252 $1,441,260 $1,028,284 $821,471 $600,716 $883,276 $1,486,436 Attachment A Schedule 2

30 Attachment A Schedule 3 NEW JERSEY NATURAL GAS COMPANY SOCIETAL BENEFITS CHARGE (SBC) REMEDIATION ADJUSTMENT RIDER REMEDIATION YEAR 2018 BPU DOCKET GR1809XXXX REMEDIATION ADJUSTMENT FACTOR Line 1 AMORTIZATION (Per Schedule 2) $8,786,695 Total Amortization $8,786,695 a 2 PRIOR YEARS' RECONCILIATION Amount to be Recovered: BPU Order - Docket No.GR $6,920,689 Total Amount to be Recovered $6,920,689 Recovery: March 1, 2016 to March 31, 2018 Actual $19,227,621 March 1, 2016 to March 31, 2018 (Estimate included in current rate) $19,177,822 True up $49,799 April 1, 2018 to March 31, 2019 (Actuals through Aug. 31, 2018) $7,663,817 Total Amount Recovered $7,713,616 Over-Recovery (792,927) b 3 INTEREST CALCULATION (Per Schedule 5 ) Interest (October 1, September 30, 2018 )* $ 528,529 c 4 TOTAL TO BE RECOVERED $8,522,297 a+b+c 5 THERM SALE PROJECTION (April March 2020) PROJECTED THERM SALES: FIRM SALES 550,481,770 FIRM TRANSPORTATION 151,778,169 INTERRUPTIBLE TRANSPORTATION 14,000,001 TOTAL PROJECTED THERM SALES 716,259,940 PRE-TAX RA FACTOR PER THERM $ AFTER-TAX RA FACTOR PER THERM $ Increase/(Decrease) $0.0021